CGT ON TRANSFER OF PROPERTY

CGT ON TRANSFER OF PROPERTY

Didn't find your answer?

Can somebody advise me on the following:

Brother X took out a mortgage on a property for brother Y . This property is Y's main residence. At the time of taking out the mortgage, Y could not afford to take out the mortgage so X took out the mortgage on his behalf. Now three years later, X wants to transfer the property to Y . Y can now afford to take out a mortgage.

This property in the last three years has gained in substantial value. So, would brother X incur a CGT on the transfer of the property to Brother Y?

STEVEN RAHMAN

Replies (1)

Please login or register to join the discussion.

avatar
By Paul Soper
23rd Jan 2006 15:29

Yes
Unfortunately yes he would, it seems, although your query doesn't make this absolutely clear, assuming that the brother who took the mortgage also took ownership of the property. It is not his main residence and so the gain arising (on MV) will not be exempt.

However if it was possible to establish that the property was acquired subject to a declaration of trust in favour of the brother in occupation, and this can be proved, then the gain could be exempted by virtue of s225 TCGA92. It may be very difficult to persuade the revenue of this but it could be tried.

Thanks (0)